This year saw the death of the Affordable Connectivity Program (ACP) and the near-death of the Universal Service Fund (USF), whose fate now rests with the Supreme Court and Congress. Here's a recap, and what to expect next.
As we close out 2024, one question hanging over next year is what will come of federal broadband funding for high-cost and low-income programs?
In addition to the predictable (and avoidable) demise of the Affordable Connectivity Program (ACP) – which ran out of funding in June – this year also saw the Universal Service Fund (USF) hit a major hurdle when the US Court of Appeals for the Fifth Circuit ruled the fund unconstitutional in July, reversing its prior decision.
For now, the USF is still operating, and the Supreme Court has agreed to review the Fifth Circuit Court's decision, following petitions from broadband industry groups and the FCC. The Supreme Court is expected to weigh in on the case in June 2025.
Some background
The USF, which funds programs like the FCC's Lifeline and E-Rate, and High Cost programs like the Rural Digital Opportunity Fund (RDOF), to the tune of $8 billion per year, has historically been funded with revenues from voice services. But as voice services decline, and the USF's contribution factor increases, policymakers and lobbyists alike have long been urging contribution reform. Indeed, a bipartisan working group in Congress has been working on USF reforms but has not released a framework or legislation as of this writing.
But depending on who you ask, that reform should ultimately include tapping revenues from edge providers, advertisers, Big Tech companies, broadband providers, or some combination of the above.
For example, Roslyn Layton, executive vice president at Strand Consult, has urged the FCC to broaden the USF's contribution base to include "a broader range of digital services which are integrated with telecommunications – namely cloud, software as a service, and digital advertising," according to an FCC filing from October 2024. Layton recommends these services versus tapping telecom and broadband services to prevent consumer bills from increasing – and because of "flat or declining" telecom revenues, whereas revenues from the digital services she mentions "are projected to grow at significant rates, according to the Bureau of Economic Analysis." Layton's financial model envisions a reformed USF as a $15 billion program that would also support a renewed ACP.
Another idea floated in a recent blog post by Blair Levin, policy analyst for New Street Research, and John Horrigan, senior fellow at Benton, is to tap online gambling revenues.
"Such a tax would not have the problem of raising the cost of broadband, something we don't want to cause. It would also not have the problem of assessing a tax on a complicated corporate revenue stream. It provides a steady and, unfortunately, growing revenue stream that can be relied upon. And its revenue opportunities are sizable enough to be part of a meaningful broadband subsidy solution," they wrote.
Un-RIP ACP?
Like Layton, various broadband advocates also see a potential reemergence of the ACP under the USF as a larger-than-Lifeline, but smaller-than-ACP broadband subsidy program for low-income households. Whereas Lifeline provides a $9.95/month subsidy for telecom services, the ACP provided $30/month and a $100 device subsidy for a larger subset of low-income households.
But whether the USF survives, and whether there's appetite for reviving the ACP under a Trump administration and Republican Congress, remains to be seen.
While incoming Vice President JD Vance (R-OH) previously supported efforts to revive the ACP in the Senate, calling it "exactly the type of program my family would have benefited from if I was growing up in Ohio today," it's unclear whether he will continue to hold that position as Trump's VP.
Moreover, Ted Cruz (R-TX), who is expected to chair the Senate Commerce Committee, has largely been anti-ACP and further believes in funding the USF through congressional appropriations. That position is at odds with the one held by Trump's nominee for FCC chair, Brendan Carr, who is an advocate for tapping Big Tech revenues to fund USF.
Light Reading will be watching how this all unfolds in 2025. In the meantime, here's a chronological recap of some of our ACP/USF coverage this year:
Read more about:
TrendsYou May Also Like
.jpg?width=700&auto=webp&quality=80&disable=upscale)
